Peter Belohlavek

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The Roots of Inflation: a Functionalist Approach

We would like to give access to a research work on currency and inflation that is ongoing at The Unicist Research Institute since 1990. This research is based on the unicist functionalist approach to economics. The objective of the research led to the conclusion that inflation is functional to different disequilibria of an economic system until it becomes chaotic, generating hyperinflation where the agents involved do not consider the functionality of the social system to ensure their own survival.

Based on this point of view of inflation, the present inflation of the world was generated by the disequilibria of the COVID-19 crisis that drove to the need of generating financial resources to compensate for the impossibility of generating value.

The end of the crisis establishes a new starting point for the economic systems that still needs to be assimilated. The war between Russia and Ukraine is another structural disequilibrium because it affected the world-economic system.

Inflation and deflation are equilibrators of the distribution of value in an economic system driven by structural disequilibria in macro- or microeconomics.  Inflation is multiplicated by the expectation of inflation that works as a catalyst to accelerate the speed of changes in prices.

The growth of the inflation rate ends when a new equilibrium is accepted in an economic system. It is recommended accessing the origins of the hyperinflation of Germany in 1923 and Hungary in 1945 which have totally different origins, one related to macroeconomic problems and one driven by structural microeconomic disequilibrium.

At the end, inflation is driven by the macroeconomics agents, but the origin is not necessarily there. For example, now the conflict between Russia and Ukraine is the origin of the inflation in Russia while the inflation of Argentina is generated by the structural disequilibrium of its productive system.

Structurally speaking, different economic systems generate different causes for inflation, which necessarily end in macroeconomic disequilibrium although they have multiple origins. Solving the structural origins of inflation allows rebalancing the economic systems and making inflation unnecessary.

We are now preparing an Open International Conference to expose and debate the functionalist approach to inflation. If you are interested in participating, please contact:  

Peter Belohlavek
The Unicist Research Institute

NOTE: The Unicist Research Institute has been, since 1976, the world-leading research organization that introduced the functionalist approach to science to manage the functionality of the real world.

The Unicist Evolutionary Approach is the Antidote to Facileness in Leadership

Facileness degrades, marginalizes and kills social evolution. As is has been researched, facileness is the root cause that underlies involving environments and business failures. It oversimplifies reality by transferring risks and costs to others and avoiding conflicts. This makes the solution of the root causes of problems unnecessary and degrades the value propositions, the reliability and the brand attributes of any culture or business.

The Unicist Evolutionary Approach

While facileness generates involution through short-term maximization, the unicist evolutionary approach drives and catalyzes evolution. 

The unicist evolutionary approach avoids facileness by designing processes as a unified field, using value adding strategies, building objects to ensure results and developing pilot tests to confirm their functionality and learn from the environment.

The concepts and fundamentals that underlie social and business functions are the root-drivers of their functionality. The eventual dysfunctionality of the fundamentals is the root-cause of the problems of these functions.

This is an approach that catalyzes the adaptability of cultures and business, their speed of growth in an environment of customer orientation and sustainability. It is the necessary microeconomic approach in the 4th Industrial Revolution.

Unicist Press Committee

NOTE: The Unicist Research Institute has been, since 1976, the pioneer in complexity science research where the Unicist Evolutionary Approach was developed. 

Social Catalysts, the Accelerators of Social Evolution

All developed, developing and emergent cultures use social objects to foster their evolution. Social objects are “encapsulated” entities that regulate the functionality of cultures. Laws, regulations, and social, economic and political systems, including institutions, and organizations of any kind, are examples of social objects.

Objects in Adaptive Environments

The social functions are regulated by driving, inhibiting and entropy inhibiting objects. The catalysts are part of the restricted context of the process that is being catalyzed, while the gravitational objects are part of the wide context. These catalysts need to be redundant with the gravitational objects that sustain the basic framework of the functions involved.

In developed cultures, legality and legitimacy tend to be overlapped. These cultures use driving, inhibiting, entropy inhibiting, catalyzing and gravitational objects that establish the framework and administrate the operational rules of the environment. See “Microeconomics driven Development”

The gravitational objects, like the constitution of a country, establish the basic framework of a culture considered as a system. The catalyzing objects establish the acceleration that ensures the synchronicity of actions for the evolution of any adaptive system.

The drivers, inhibitors and entropy inhibitors establish the operational rules that have to be followed to be part of the system.

Unicist Press Committee

NOTE: The Unicist Research Institute has been, since 1976, the pioneer in complexity science research where the Unicist Evolutionary Approach was developed. 

MDD Project – Country Brand

The empowerment of the value of country brands is basic to manage sustainable globalization and exerting diplomatic power. When we talk about country brand we mean the value behind a single phrase or word: “made in Germany, USA, Taiwan, China, Japan, etc.” or the name of the country as a representation of its values.

Microeconomics driven development requires the empowerment of the brand of the country that decides to expand, which implies a definition where the country will be competing and how.

Brands are defined by the expectation of added value they generate, the uniqueness of their attributes and the consistency of their actions. The empowerment of country brands requires managing the concept, and of the under-promising and overdelivering attitude to install a consistent brand.

It requires several decades of significant investment in communication to empower a country brand which needs to be believed the members of the community in order to be consistent.

To be consistent, it is necessary that those aspects of the society that are chosen as representative of a countries positioning assume a world class positioning. The amplitude of the meaning of “world” defines the functionality of the brand.

Microeconomics Driven Development

MDD Project: Social Crises foster Growth or Degrade

Social crises unavoidably foster the change of an environments. Crises happen when the security framework of a society or group becomes dysfunctional. Social crises always include economic, ideological and social aspects.

Crises force people to do things that would not have done before in order to survive. The palliation of crises is a spontaneous natural response that sustains the status quo of a society and, if palliation succeeds, all remains unchanged but degraded, towards a lower level of collective ethical intelligence.

Crises drive people towards a superior level of individualism to ensure their individual survival and the survival of the group they belong to. Those cultures that are subject to regular crises, whatever their kind, have a weak cultural nucleus.

Crises for growth

There is a different functionality of crises when they occur in an environment that has a long-term goal implicit in its archetype which drives the collective intelligence. Crises work as catalysts for growth when they happen in a society or group that has long term goals.

Crisis management for growth requires developing simultaneously two strategies: a maximal strategy to develop structural adjustments based on the lessons learned from a crisis and a minimum strategy to palliate the negative effects trying to minimize the dysfunctional effects of the increase of individualism.

In cultures that have been affected by regular crises for decades that first step is to install long term planning which, paradoxically, is considered as not feasible in such environments.

Microeconomics Driven Development

MDD Project: Startups vs. Butterfly Companies

Depending on the width of the application field of the innovation, there is a notorious difference between businesses that are built upon an invention or discovery. There is a high risk of building a butterfly company when the innovation has a specific use with a specific added value.

A butterfly company is defined as a business that has a beginning and an end within a short timeframe. Only innovations that create a category that has social added value where the trends expand their use can be considered as start-up businesses. A category has been created when a new concept has been installed.

If you read the history of Google, Apple, Ford, Siemens, Facebook, etc. you will find the description of startups that became corporations. There is no difference between them and the creation of a startup based on an innovation that has notorious social value, where the IP can be protected and that is able to build a growing market.

Isolated inventions need to be managed as opportunities that will be absorbed by the market and where the creators can make a larger or smaller profit depending on their negotiation capacity.

Microeconomics Driven Development

MDD Project: Research based Learning for Graduate Studies

The objective is to install in postgraduate studies and doctorates the research-based learning approach focused on developing real solutions for unsolved problems.

The goal of this new standard is that the participants learn from the feedback of their decisions and are able to approach the solution of problems in adaptive environments.  It moves from an answer driven learning approach to a question driven learning approach.

More than 20 years ago, the unicist reflection driven learning approach was developed at The Unicist Research Institute. The objective of this approach was to provide an educational framework and a methodology to foster the learning of the management of root causes of adaptive systems and environments.

The final goal of this approach is that the participants develop real solutions for complex problems which include their implementation to confirm their validity.

This approach is homologous to the research-based learning approach when it is fully focused on developing and implementing a solution. It differs totally from a research approach based on literature surveys.

For the case that the standard of research-based learning cannot be installed as an educational standard, the MDD project includes the reflection driven education for the leaders of private organizations.

Microeconomics Driven Development

The Structure of Unicist Economic Scenarios

Unicist Economic Scenarios deal with the concepts that drive production, distribution and consumption of goods and services. They deal with the materialistic aspects of a society to ensure its survival and growth while providing a basis for the evolution of the coming generations.

The unicist conceptual economy considers that the core objective of economy is the organization of work processes in a culture or institution. Economic Scenarios can only occur within the level of the archetype of a culture and based on the values of work .

The purpose of an economic scenario is to generate wealth, its active function that puts this purpose into action is the generation of social added value, which makes wealth become useful, and the energy conservation function is the generation of wealth with growth.

This synthetic definition requires entering the definition of the three elements that integrate economics in order to define the sub-concepts/fundamentals that integrate it. It has to be considered that each of the concepts that define conceptual economy need to reach a threshold according to the expectations that are implicit in the social scenario that are finally based on the values implicit in the archetype of a culture.

The Ontogenetic Map of Economic Scenarios

Conceptual economy organizes what is possible to be achieved. Crises occur when any concept becomes dysfunctional and does not work within its credibility zone and cannot be compensated by its energy conservation function.

The final purpose of conceptual economy is the generation of wealth, which can only be achieved if the culture is driven by the value of work as a value generating action and not only as a way to survive.

But work as a value can only generate wealth if it is sustained by the necessary technology that allows dealing in a competitive context. Technology implies necessarily innovation.

Work and technology can only establish a meaningful integration when people are driven by the need to learn. This implies that the environment needs to foster the generation of value and improvement in order to evolve and thus a learning context is given.

Levels of Functionality of Economic Scenarios:

The four levels of effectiveness of economic scenarios are:

Level 1) Incentive driven

Level 2) Technology driven

Level 3) Market driven

Level 4) Transcendence driven

At an operational level, economic scenarios need to consider the conjunctural and structural aspects to provide employment and foster innovation and the development and use of technologies.

Level 1) Incentive driven

It is the segment of the economic activity that needs incentives to foster consumption and to use technologies that increase its effectiveness.

Level 2) Technology driven

It is the segment of the economic activity that is fully technology dependant to achieve the generation of growth and wealth. It requires strong investments in education to foster innovations and improvements in work processes.

Level 3) Market driven

It is the segment of the economic activity that is competitive in terms of value and price, which allows following the needs of the markets.

Level 4) Transcendence driven

It is the segment of economic activity that has achieved a level of maturity that allows managing structural investments to ensure the wellbeing of the coming generations.

Peter Belohlavek

NOTE: The Unicist Research Institute has been, since 1976, the pioneer in complexity science research to deal with adaptive entities and became a private global decentralized leading research organization in the field of adaptive systems and environments. It was one of the precursors of the Industry 4.0 concept.

Economic Power puts Archetypical Power into Action

The Power of Nations is based on the construction capacity which is given by work and sustained by the non-exerted destruction capacity that we call dissuasion power.

This implies that the economic power has to provide the maximal strategy, the possibility of upgrading to the next step while the dissuasion power developed by the administrative authorities of the country provides the necessary secure environment to grow.

It has to be considered that the economic power is basically individualistic oriented. In the materialistic world the same “thing” cannot be shared. Money is in my pocket or it is in your pocket. It cannot be in both at the same time.

That is why the nature of the materialistic world is the dualism which naturally drives towards fostering activities based on individual initiatives.

This is not necessary at a subsistence level but it is a must if a culture fosters expansion and influence in the environment.

Diana Belohlavek

NOTE: The Unicist Research Institute was the pioneer in using the unicist logical approach in complexity science research and became a private global decentralized leading research organization in the field of human adaptive systems. It has an academic arm and a business arm.

How Economic Growth can be Fostered

The unicist ontology of economic growth defines that it is based on the action of a technological driver and sustained by the need to avoid scarcity.

If we describe the concept of economic growth, its ontology or fundamentals, we can say that economic growth is driven by technology, monetary circulation, competitiveness and scarcity.

Considering the active principle, that sustains the maximal strategy, technology is the purpose that must be achieved in order to make an economy grow.

This purpose is put into action by a consumer’s monetary circulation and sustained by value competitiveness.

The active principle of economic growth requires:

  • Technology: technology implies an improvement of the generation of added value with less energy consumption and less energy losses. Thus the economy grows in terms of increasing the available added value that can be traded in the community.
  • Consumer’s monetary circulation: is the necessary money and credit available to access goods for the mass population.
  • Value competitiveness: is the capacity to compete providing superior value and not based on cost advantages.

The energy conservation principle, that sustains the minimum strategy, requires the integration of a need to avoid scarcity, productive monetary circulation to finance the production of goods and services and price competitiveness in order to win markets based on price advantages.

Diana Belohlavek

NOTE: The Unicist Research Institute was the pioneer in using the unicist logical approach in complexity science research and became a private global decentralized leading research organization in the field of human adaptive systems. It has an academic arm and a business arm.